The U.S. has positions also, much stronger and more far reaching. I have just not chosen to use them, there was never a reason for me to do so — UNTIL NOW!
That stunning threat of unprecedented force from President Donald Trump sent the stock market tumbling nearly 3% – on October 10, 2025.
In a two-part Truth Social post six months ago, Trump said the United States would shut off critical exports to China and raise tariffs on Chinese goods to 100%, a maximalist threat to regain lost American leverage.
If that all sounds familiar, that’s for a good reason.
Today, the United States faces a remarkably similar kind of economic threat from Iran as it did from China last year. In response, Trump is employing the same extreme playbook he used against China and other trading partners: Dial up the threat to 11, demand the world, and settle for something more than America started with.
Trump has threatened massive retaliation against Iran if it fails to open the Strait of Hormuz – the critical waterway through which 20% of the world’s crude typically travels. On Sunday, Trump once again upped the ante, saying the US Navy would blockade the strait.
The problem is, this isn’t a trade war; it’s actual war, and the latest strategy shift could put more US troops in harm’s way.
So far, Trump’s extreme threats against Iran aren’t working, risking enduring economic pain for consumers and a deadly war that has cost the lives of thousands.
The tariff playbook
Over the past year and a half, Trump frequently issued maximal threats against various trading partners to varying degrees of success. Although Trump earned a well-deserved reputation for backing off his most alarming threats (taking control of Greenland, forcing Brazil to call off its election fraud case against former President Jair Bolsonaro), many trading partners acquiesced to Trump’s terms.
But Iran is following China’s model instead.
Trump last spring dialed up China’s tariffs so high that it created a virtual embargo on Chinese goods to the United States. China retaliated by restricting exports of rare-earth minerals critical to a wide range of electronics, threatening US businesses, consumers and even the military.
Trump relented and brought tariffs way down – in exchange for China’s pledge to reopen the rare-earth floodgates. But China never backed down, hanging onto its trump card, despite Trump’s repeated threats to raise tariffs again – a power the Supreme Court recently blunted.
Iran, similarly, views control over the Strait of Hormuz as the one piece of leverage it wields over the United States as a tool to stop an existential war and bring America to the negotiating table.
Iran’s economic counterpoint
Perhaps learning from its ally, Iran does not appear willing to give in so quickly.
“Enjoy the current price of gasoline,” wrote Mohammad Bagher Ghalibaf, speaker of the Iranian Parliament, in a post on X. “With what is being called a ‘blockade,’ you will soon miss $4 to $5 gasoline.”
Trump’s threat Sunday to blockade the Strait of Hormuz could choke off Iran’s oil sales and the multimillion-dollar tolls that were helping finance its war against the United States.
But those Iranian crude sales of roughly 2 million barrels per day were also keeping oil prices somewhat in check by adding much-needed supply to the global market.
The market’s response to Trump’s blockade threat was instantaneous: Brent oil futures, the international benchmark, surged 8% Sunday night to $103 a barrel, and Trump’s blockade could send prices another $10 higher – close to their recent highs, said Jay Hatfield, CEO of Infrastructure Capital Advisors.
Traders will prefer a blockage threat over Trump’s previous pledge to destroy Iran’s oil and infrastructure, Hatfield said. But if the market believes the war will drag for weeks or months longer, oil prices could quickly rise above $120, testing four-year highs, said Homayoun Falakshahi, lead crude research analyst at Kpler.
Americans should expect to pay even more as a result. In part because of the increased price of fuel, the typical American household is spending $233 more a month on the same goods and services than a year ago, according to Moody’s analytics.
US gas prices had started to fall a bit, but they will rebound because of Trump’s blockade, according to Joe Brusuelas, chief US economist at RSM. So too will diesel and jet fuel, he said – and the blockade will send investors out of bonds, lifting yields further, and threatening to raise mortgage rates and the cost of borrowing for millions of Americans. Inflation expectations will continue to rise.
Iran’s continued control over the strait gives it significant leverage in the war – its military and leadership have been devastated, but it retains economic power over the United States and the world.
That’s why – so far, at least – Iran isn’t wavering.
